EU boss lashes out at Stephen Harper and other leaders: Don't tell us how to run our economy

Weeks after delivering a hard-line message to the EU on the necessity of austerity, Prime Minister Stephen Harper found himself on the receiving end of harsh criticism from one of Europe's most important politicians

In diplomatic terms, this is the equivalent of “up yours.” It is understandable that EU leaders might resent interference from abroad, but in this case Stephen Harper has a sound case to make. The EU economy is anything but a “model to be proud of.”

And while Canada is anything but immune to the painful impact a European collapse would entail, few G20 countries would likely hesitate to swap their economic record for Mr. Harper’s, given the chance…

LOS CABOS, Mexico — Weeks after delivering a hard-line message to the EU on the necessity of austerity, Prime Minister Stephen Harper found himself on the receiving end of stinging criticism from one of Europe’s most important politicians.

Europe’s debt crisis remains front-and-centre at this week’s G20 talks in Mexico, where there is speculation Canada will be invited to join the Trans-Pacific Partnership.

But on Monday, European Commission President Jose Manuel Barroso lashed out at those who lecture the continent on how to get its economic house in order — the prime minister among them.

The tense standoff — which emerged in separate news conferences about an hour apart — occurred as leaders of the G20 nations began a two-day summit here dominated by the continuing economic crisis in Europe.

Harper is among world leaders urging his European counterparts to move swiftly on structural changes to contain the debt crisis but Barroso said the continent didn’t need tips on economic stewardship from anyone.

“Frankly, we are not coming here to receive lessons in terms of democracy and in terms of how to run an economy because the European Union has a model that we may be very proud of,” Barroso said.

“We are not complacent about the difficulties. We are extremely open. I wish that all our partners were so open about their own difficulties. We are extremely open and we are engaging our partners but we are certainly not coming here to receive lessons from nobody.”

Barroso was also prickly about Europe assuming the entirety of the blame for its debt troubles. When asked by a Canadian journalist why North Americans should “risk their assets to help Europe,” Barroso was quick to respond that “this crisis was not originated in Europe … the crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices from some sectors of the financial market.”

Bertrand Langlois/AFP/Getty Images

Barroso reacted strongly to Harper’s contention that Europe has the financial firepower to deal with its own crisis. The International Monetary Fund is trying to raise $430-billion in rainy-day cash in case the economy tanks.

He said Europe is already the biggest contributor to the IMF for its programs — “bigger than the United States, certainly much, much, much bigger than Canada.”

Even in this crisis, he said, Europe is contributing the largest share to the IMF rescue fund. He suggested that it would be wise for nations elsewhere to do likewise because it ultimately is in their own economic self-interest.

In a pointed reminder, he noted that Canada is trying to complete a free-trade agreement with Europe.

“Why? Because all the other parts of the world look at Europe as a source of possible growth for them. And, in fact, they also have an interest. The sooner the situation is stabilized in Europe, the better for them.

“So that’s why my position and the position of the European Union has been to say, let’s work co-operatively for this. Let’s work together.”

But Harper said Europe has the resources to deal with the debt crisis on its own. He has rejected the idea of pledging more money to the IMF. Canada already pledged $10-billion to the fund in 2009.

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“What European countries need to do, and what we will be looking to see, are clear commitments that they are prepared to take all of the necessary actions that are within their capacity to deal with these problems.

“And to create the structural changes necessary to create a genuine financial union in Europe that can deal with these problems on an ongoing basis.”

When asked about Canada’s chances of getting a seat at the negotiating table in a round of major trade talks, though, Harper played coy.

“We’re delighted that Americans and others have indicated an interest in seeing Canada join the Trans-Pacific Partnership,” Harper said. “I think for now I’ll just leave it at that.”

Mexico’s inclusion in the talks may bode well for Canada’s hopes.

THE CANADIAN PRESS/Adrian Wyld

Rumours and chatter abound at the G20 summit in the Mexican oceanside resort of Los Cabos that Canada will be allowed to join the negotiations on Trans-Pacific Partnership, a deal many believe will be have more economic strength than the North American Free Trade Agreement.

The governing Conservatives have been lobbying the Obama administration for months to grant Canada admission to the talks.

Harper even dispatched his trade minister, Ed Fast, around the globe to drum up support for a seat at the table.

Some analysts interpreted the inclusion of only Mexico in the negotiations as a rebuke. But it may well be that since Mexico is hosting this week’s G20 summit, it would be asked to the talks before Canada or Japan, which has also been vying to get in.

“Apparently Canada doesn’t make the grade. At least not for now,” trade lawyer Lawrence Herman of Cassels Brock wrote in an email.

“If this is true, it’s a slap in the face for the Harper government and a real setback for its trade policy agenda. It raises questions about why, after all this intense lobbying and arm-twisting by the federal government, the Americans still feel Canada isn’t welcome.

Paul J. Richards/AFP/Getty Images

“Its especially galling that Mexico, a NAFTA partner, is being welcomed on board and not Canada.”

Herman said Canada has not put enough bargaining chips on the table to be welcomed to the group.

Canada’s trade restrictions on dairy and poultry products present the biggest obstacle to joining the nine-country talks. Canada has a supply-management system that controls milk and egg prices while setting prohibitively high tariffs on imports.

The Trans-Pacific Partnership is one of many items up for discussion at this luxury resort area on Mexico’s Baja California peninsula.

Leaders of the world’s 20 most important economies breathed a sigh of relief after Greek voters elected a government that intends to keep the cash-strapped country in the 17-member bloc of countries that use the euro common currency.

But Europe’s debt trouble still got plenty of attention.

According to a draft of a statement to be released at the end of the meeting Tuesday, the G20 leaders will portray themselves as united behind efforts to boost growth and job creation in order to repair a fragile global economy.

The statement includes language that appears aimed at reassuring investors that Spain’s treasury won’t end up eating the costs of the up to 100-billion euro rescue of Spain’s banks announced this month. Fears that the responsibility of paying back the bailout would fall on its government helped drive Spain’s borrowing costs above the dangerously high 7% level.

The statement also praises Saudi Arabia’s pledge to keep oil prices from going too high by amping up production and praises China for a promise to move away from policies that keep its currency artificially low, giving Chinese exports a price advantage on world markets.

“We are united in our resolve to promote growth and jobs,” the draft says, declaring that the leaders will announce the “co-ordinated Los Cabos Growth and Jobs Action Plan” to achieve those goals, although the draft does not provide details of the plan.

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With files from Steve Rennie, The Canadian Press, Mark Kennedy, Postmedia News and The Associated Press

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